(07-19-2021, 02:29 PM)danbrotherston Wrote: I wouldn't say I am uninterested in having a local airport. I am uninterested in spending 40+ million dollars of our funds on it. I think we have much higher priorities. If an airport can be self-sufficient, I have no problem with it.
The expected increase in subsidy for the Flair expansion is $2/household/year. So while yes, the total bill is $40M, a large amount of that is expected to be recovered via fees. The amount of "our funds" spent is less. The percentage of the airport operating budget coming from taxes would decline significantly in this plan, even though the dollar amount of subsidy increases slightly.
(07-19-2021, 02:29 PM)danbrotherston Wrote: I guess that could be the case, but do you have concrete examples of how they changed their approach. Route exclusivity seems meaningless when we can't really attract one airline let alone competing interests. AFAIK all our previous routes have been exclusive. But if we are offering this kind of non-monetary incentive, that further strengthens the argument that we are overspending on this private for profit sector. IMO.
You have to look at the history of ULCCs in Canada to understand why route exclusivity is important. When New Leaf started offering ULCC-like fares from YHM, WestJet immediately launched Swoop which offered the same routes at even lower fares out of YHM. Swoop was of course operating at a loss, but that was okay for WestJet. The objective of Swoop was to drive New Leaf out of business, to protect the high domestic air fares currently enjoyed by the AC/WJ duopoly. If Canada had anti-trust enforcement with actual teeth that would be classic predatory pricing, and quite illegal, but Canada basically doesn't enforce anti-trust laws against major Canadian companies (see Rogers/Bell/Telus). Rogers did the same thing with Chatr right after Wind launched, operate at a loss and only in the same areas to bankrupt the competition before they could pose a real threat.
YKF never had route competition before because there was no reason to. YKF has had service by West Jet and AA, which are mainline carriers charging the same high fares. YKF management realized that by offering 3 year route exclusivity they could give a ULCC a chance to get off the ground, without the danger of predatory pricing from AC/WJ, and to become the ULCC airport for the GTA.
Ultimately there's non-zero risk with Flair, but the route exclusivity gives them a huge boost in their ability to get off the ground. It might cost YKF some theoretical landing fees from AC/WJ flanker brands, but given their only objective would be to bankrupt Flair then raise prices, those landing fees would overall be a net negative (as without Flair there'd be no reason for people to drive out to YKF for low fares, and result in the flights being cut).